Data from Nepal Rastra Bank (NRB) shows that during the first four months of the current fiscal year (FY), inflows of funds have significantly outpaced outflows in Nepal. After recording a surplus of Rs 150.24 billion during the same period the previous year, the Balance of Payments (BoP) surplus increased to Rs 258.3 billion. Year-over-year, the surplus grew from USD 1.13 billion to USD 1.53 billion in US dollars.
Compared to Rs 97.10 billion in the same time of the previous fiscal year, the country's current account surplus improved dramatically to Rs 143.42 billion during the review period. The surplus grew from USD 736 million to USD 1.6 billion. Net capital transfers also increased from Rs 1.59 billion to Rs 2.47 billion, while direct foreign investment inflows increased from Rs 3.65 billion to Rs 5.76 billion.
With a 4.2 percent increase to Rs 52.67 billion, merchandise exports demonstrated a favorable trend. After falling 7.7 percent over the same time last year, this represents a comeback. While exports to China and other nations decreased by 18.3 and 3 percent, respectively, exports to India increased by 8.4 percent.
Regarding commodities, Nepal had a rise in the export of betel nuts, polyester yarn, tea, soybean oil, and particle board. On the other hand, exports of juice, ginger, ready-made clothing, palm oil, and zinc sheets fell from the year before.
Imports of merchandise increased slightly by 0.2 percent to Rs 513.39 billion. Imports had decreased by 3.8 percent the previous year. While imports from other nations decreased by 5%, imports from China and India increased by 2.9% and 0.9%, respectively.
Transportation equipment, automobiles and their replacement parts, edible oil, sponge iron, garlic, and telecommunications equipment were the main drivers of the increase in imports. However, at this time, there were decreases in the imports of electrical equipment, gold, crude palm oil, petroleum products, and airplane spare parts.
The performance was uneven, according to customs data. The volume of exports handled by important customs offices such as Bhairahawa, Biratnagar, Birgunj, Kailali, Krishnanagar, Mechi, Nepalgunj, and Rasuwa declined. Conversely, imports surged via a number of important customs offices, including as those in Bhairahawa, Dry Port, Jaleshwar, Kailali, Kanchanpur, Rasuwa, and Tatopani.
Nepal's goods trade deficit eased a little, falling by 0.3 percent to Rs 460.72 billion. The trade imbalance had decreased by 3.3 percent at the same time last year. The improved export-to-import ratio, which went from 9.9 percent to 10.3 percent last year, is consistent with this progress.
During this time, more convertible foreign currency was used to purchase commodities from India, totaling Rs 57.24 billion, up from Rs 53.84 billion the previous year.
The BoP and current account surpluses' upward tendencies suggest that Nepal's financial stability has improved. Nonetheless, the reduction in certain export categories and heightened dependence on imports underscore persistent difficulties in trade diversification.
A good development that demonstrated close trade relations was the rise in exports to India. Reduced exports to China and other nations, however, suggest possible market-specific issues that require attention.
While the minor increase in imports reflects a steady need for necessary equipment and items, the fall in important imports such as gold and petroleum products points to shifting priorities and patterns of spending.
Although Nepal's trade dynamics have improved in some areas, the inconsistent results in particular trade categories and customs activity highlight the need for focused policy to maintain and build on these advances.
